Gold extended to the upside in European trading, establishing a new 2½-month high at 1233.31 before retreating into the range. The yellow metal continues to garner support from heightened risk aversion.

Brexit negotiations broke down late yesterday, apparently over whether there is to be a hard border with Ireland. Brussels has given the UK a 24-hour deadline to settle on a position, before they respond. The risks of a hard-Brexit have intensified. The associated uncertainties are arguably bad news for both Europe and the UK.

Additionally, Spain’s socialist government will seek to increase deficit spending — in the manner of Italy — to pay for populist measures. The biggest hike to the minimum wage in 40-years is apparently in the works, as are increases to public pensions and unemployment benefits. Planned tax hikes on corporations and wealthy individuals will not cover the whole tab.

The ongoing trade war between the U.S. and China remains a concern. Heightened tensions between the U.S. and Saudi Arabia over what some are alleging was the state sanctioned murder of a journalist, is the latest hot spot.

Gold moved decisively above the 100-day (1228.38 today) and 20-week (1224.68 today) moving averages in earlier trading, before dropping back to this area. The 200-week moving average at 1234.21 has successfully contained the upside thus far.

A close above these important indicators of trend would lend some credence to the bottoming scenario, putting the 38.2% retracement level of this year’s decline at 1238.58 to the test. Above that, the 50% retracement level at 1262.76 would be in play.

Silver posted some follow-through gains as well, favoring a short-term retest of the 14.92 high from 02-Oct. A breach of that level would shift focus to 15.24, the 38.2% retracement level of the decline off the June high at 17.33.

The 50-day MA (14.57 today) and 9-day MA (14.55 today) continue to serve as initial support, keeping the more important 20-day MA (14.47 today) at bay. A short term close above the latter would leave silver in a more neutral position.

Platinum extended to the upside, setting fresh 13-week highs. While platinum has since pulled back into the range, last week’s convincing move above the 100-day and 20-week moving averages keeps focus on the upside. The next objective is 859.92, which marks 38.2% retracement of the decline from 1028.61 (25-Jan high) to 754.03 (16-Aug low).

Palladium remains well bid near the recent highs 1095.90/1097.03. A more convincing violation of the former would bode well for the anticipated retest of the all-time high at 1139.62 (15-Jan).


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